Overview: Cartels and Abuse
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This chapter provides an overview of recent regulatory developments, including legislative changes and enforcement activity, in the vibrant and dynamic Asia-Pacific region. As this chapter demonstrates, the regulatory and institutional landscape in the region continues to evolve, while the costs of infringing competition law are mounting.
- Asia-Pacific competition authorities’ enforcement activities return to normal after the outset of the covid-19 pandemic
- Legislative and regulatory updates across the Asia-Pacific region
- Enforcement trends in the Asia-Pacific region
- Ongoing antitrust enforcement in the digital sector
- Enforcement tools available to competition authorities
Referenced in this article
- Hong Kong Competition Commission (HKCC)
- Australian Competition and Consumer Commission (ACCC)
- Competition and Consumer Commission Singapore (CCCS)
- Korean Fair Trade Commission (KFTC)
- State Administration of Market Regulation of China (SAMR)
- Taiwan Fair Trade Commission (TFTC)
- Commission for the Supervision of Business Competition of Indonesia (KPPU)
- Japan Fair Trade Commission (JFTC)
- Malaysia Competition Commission (MyCC)
- Competition Commission of India (CCI)
The dynamic pace of change in competition law in the Asia-Pacific region makes it impossible to provide a comprehensive overview of all developments over the past year. Moreover, while Asia-Pacific competition authorities increasingly focus their sights on large global companies (not least of which the major digital platforms), the ‘bread and butter’ even for established regulators like the Japan Fair Trade Commission (JFTC) or Korea Fair Trade Commission (KFTC) remains bid-rigging for public works projects or purely domestic markets. Accordingly, this chapter aims to provide a snapshot of the key enforcement themes in the region over the past year that are of most relevance to global companies.
As this chapter makes clear, the regulatory and institutional landscape in the Asia-Pacific region continues to evolve, notwithstanding the difficulties of covid-19. As in previous years, 2021 saw the introduction of new laws, as well as important guidelines providing further clarity on competition law compliance. Perhaps most significantly, a major institutional reform of China’s State Administration for Market Regulation (SAMR) antitrust division means that SAMR is likely to become an even more significant international regulator than before.
While competition authorities across the region continued to focus enforcement efforts on digital markets, cartel enforcement remains an important priority, aided by a return to dawn raids in some jurisdictions. As competition authorities have become more confident, abuse of dominance cases also become more common. Fines overall rose in several jurisdictions in 2021. In many ways the costs of infringing competition law in the Asia-Pacific region are higher than ever before.
Asia-Pacific competition authorities back to ‘business as usual’
The initial scramble by Asia-Pacific competition authorities, many of which also have general consumer protection functions, to deal with supply chain shocks caused by covid-19 has largely subsided. 2021 saw some enforcement in relation to ‘price-gouging’ (most recently in relation to rapid antigen testing kits), as well as covid-19 guidance from the Vietnamese competition authority, but generally enforcement priorities have returned to traditional sectors and types of infringement.
The relaxation of social distancing measures in most countries has meant a return to dawn raids. Notable raids in 2021 included a raid into Meituan Group in China in April, the JFTC’s inspection of power suppliers (three times) and pharmaceutical distributors, two raids of Korea’s Kakao Mobility group by the KFTC and a raid into the premises of the cleansing service contractors by Hong Kong Competition Commission (HKCC). Despite resuming raids, however, the JFTC has been limited in its ability to conduct face-to-face interviews, traditionally an important investigative tool for the JFTC. The east coast of Australia continued to be subject to significant social distancing rules during much of 2021. However, the Australian Competition and Consumer Commission (ACCC) was increasingly using its dawn raid powers prior to the onset of the pandemic and, with social distancing rules beginning to ease, it is expected that the ACCC will do so again.
Similarly, the economic impact of covid-19 has not dented competition authorities’ financial standing in the region. A 2021 OECD study found that budget and staffing levels across the Asia-Pacific region continue to increase, with budgets rising by 22.7 per cent over the past six years, and staff levels increasing by 23.7 per cent. The JFTC and KFTC remained the best-funded agencies after the European Commission and US enforcers in 2020. SAMR’s anti-monopoly division’s elevation to vice-ministerial status (considered in more detail below) has meant an increase in both budget and staff, with enforcement staff due to increase by a third in 2022. Both the ACCC and the New Zealand Commerce Commission also secured modest increases in the past year, while Indonesia’s Komisi Pengawas Persaingan Usaha (KPPU) is seeking a whopping increase of 300 per cent.
Noteworthy regulatory and institutional developments
Regulatory and institutional developments have also continued apace in 2021.
One of the most significant institutional developments in the past year has been the elevation of SAMR’s anti-monopoly division (now titled the National Anti-Monopoly Bureau). This development was preceded by President Xi’s statements in the 21st meeting of the Central Committee for Comprehensively Deepening Reforms on 30 August 2021, that strengthening anti-monopoly and further promoting the implementation of fair competition policies are the inherent requirements for improving the socialist market economy. This signals the growing importance of anti-monopoly and fair competition policy within the political framework.
The move gives the new Bureau a much more prominent position within the Chinese government, as well as substantially more resources and operational independence. While the Bureau will still sit within SAMR, its new head, Gan Lin, will report directly to China’s top leadership. The new status of the Bureau is also likely to lead to much more active enforcement of competition law in China.
Ms Gan will be responsible for three bureaus within the National Anti-Monopoly Bureau:
- Enforcement I: responsible for enforcement in relation to monopoly agreements, abuse of market dominance, and abuse of intellectual property rights to exclude and restrict competition, including those in the digital economy.
- Enforcement II: responsible for conducting merger control, handling unlawful implementation of concentrations, and dealing with cases that do not meet the notification standards but may eliminate or restrict competition.
- Policy coordination: responsible for overall planning, promotion and implementation of competition policies. The division will provide guidance on competition enforcement for local regulators and other government departments, and lead on the drafting of anti-monopoly system measures and guidelines. It will also be responsible for internal review of enforcement cases, as well as international cooperation with other competition regulators.
At the same time as elevating the new National Anti-Monopoly Bureau, the National People’s Congress is considering substantial amendments to the country’s Anti-Monopoly Law. Substantial developments include:
- introducing a safe harbour to exempt horizontal and vertical agreements that do not have anticompetitive effects, provided that the parties’ relevant market shares are lower than the thresholds (which have not yet been set);
- explicitly identifying ‘hub-and-spoke’ arrangements as a type of infringement;
- increasing penalties for infringements of the law;
- introducing personal liability for substantive violations; and
- introducing public interest competition litigations.
In July 2021, SAMR, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, and the Ministry of Justice jointly published the ‘Detailed Rules for the Implementation of the Fair Competition Review System’, aimed at refining the system to maintain a unified national market and fair competition. SAMR also issued its ‘Guideline on Overseas Anti-monopoly Compliance for Enterprises’ in November 2021, aimed at guiding Chinese companies to strengthen their antitrust compliance overseas.
Following the passage of a new competition law in Cambodia, all Association of South-East Asian Nations (ASEAN) member states now have competition laws in place – a key plank of the ASEAN Economic Community’s 2025 Blueprint. Notably, the new Cambodian law provides for potential criminal penalties for cartel conduct. As noted below, criminal prosecutions are becoming increasingly common across the Asia-Pacific region.
Other newer competition authorities in the ASEAN bloc, such as those in Brunei Darussalam and Myanmar, have yet to actively enforce their laws, instead continuing to build capacity and to carry out advocacy promoting the importance of competition policy.
An older ASEAN member state authority, the Competition and Consumer Commission of Singapore (CCCS), has revised its enforcement guidelines for the first time in five years. The new guidelines reflect on the CCCS’ 2020 E-commerce Platforms Market Study, providing guidance more targeted to the digital era. In particular, the revised CCCS Guidelines on the section 47 Prohibition Guidelines further clarify the issues relating to the assessment of market power and types of potentially abusive conduct in digital markets.
In May 2021, Indonesia also issued new administrative fines guidelines following a recent amendment to the Indonesian Competition Law, which increased maximum possible fines. The new guidelines provide more detailed provisions on the relevant calculation methodology and payment process.
Following significant amendments to Korea’s Monopoly Regulation and Fair Trade Act in December 2020, a raft of KFTC rules and guidelines underwent public consultation and implementation in 2021. The changes brought about by the amendments mostly came into effect in December 2021, and include enhanced procedural fairness (particularly regarding access to evidence on the KFTC’s file), fines of up to double the existing limit (fines are now capped at 20 per cent of relevant turnover for cartel conduct, for example), as well as the addition of ‘pure’ information exchange (without explicit coordination) as a ‘hardcore’ cartel infringement.
The KFTC’s new guidelines provide specific guidance to businesses in relation to information exchange, as well as various procedural matters including cartel enforcement and leniency. Further guidelines are planned for 2022, including in relation to abuse of dominance in platform markets.
Two significant changes to key ACCC personnel were announced in late 2021.
The first of these was that Gina Cass-Gottlieb, a lawyer by trade, would be taking over from Rod Sims as ACCC chair from late March 2022. Rod Sims, by contrast, is an economist who has held the position for 11 years. The ACCC chairperson exercises significant influence over the direction and priorities of the ACCC. Gina Cass-Gottlieb’s appointment, following the long tenure of Rod Sims, may have a significant impact on the future activities of the ACCC.
The Australian government has also announced that Liza Carver, former Herbert Smith Freehills partner and regional head of practice, has been appointed as ACCC Enforcement Commissioner for a five-year term, commencing 1 March 2022.
An ongoing focus on digital markets
The past several years have seen a clear enforcement focus on digital markets and large tech platforms by competition authorities across the region, as with elsewhere in the world. This enforcement focus has sharpened further in 2021.
This was clearly seen in China, where SAMR published its Anti-Monopoly Guidelines for the Platform Economy on 7 February 2021. These guidelines are aimed at regulating platform service providers, and heralded a deluge of enforcement activity against Chinese tech companies during 2021. Zhang Gong, the head of SAMR, stated in a recent interview that SAMR plans to tighten enforcement of antitrust and anti-unfair competition rules in 2022, and that SAMR will ‘strengthen supervision and law enforcement in key areas such as the platform economy, technological innovation, information security and the protection of people’s livelihood’. This signals that the tech sector will continue to face close government scrutiny after a year of forceful regulatory clampdowns on the country’s big tech firms.
There are two particularly noteworthy enforcement cases against big tech firms in China. First, on 10 April 2021, SAMR fined Alibaba Group Holding Limited for abuse of dominance by engaging in a practice described as ‘choosing one from two’, which prohibited in-platform vendors from operating stores or participating in campaigns on rival platforms. This was followed by SAMR’s fine against Meituan in October 2021 of 3.44 billion yuan for the same type of conduct, by forcing merchants to exclusively use its platform and to pay a fee to do so.
Japan and Korea have also both declared digital markets to be key enforcement priority in 2022. This follows a busy year of enforcement for the KFTC against the so-called GAFA companies, including a 207 billion Korean won fine against Google for abuse of dominance in relation to its Android mobile operating system, dawn raids against Google and Facebook in relation to digital ad sales, as well as an investigation into in-app payment commissions that led to amendments to the country’s Telecommunications Business Act in August. The focus of these investigations largely follows similar investigations in the EU and elsewhere, indicating that the KFTC aims to be seen as a leading enforcer in this important and rapidly developing field of regulation.
Netflix has also been under investigation for ‘unfair market practices’ (an intermediary category of anticompetitive conduct that does not require a dominant market position to be unlawful), in particular in relation to Netflix’ refusal to pay network usage fees. The issue reached a fever pitch in October when streaming of the hit Korean Netflix drama Squid Game temporarily ‘broke’ Korea’s internet, leading to a rare rebuke from President Moon Jae-In.
The KFTC’s enforcement efforts have not been limited to American tech companies, however, with multiple dawn raids against local mobility services provider Kakao.
The ACCC also continues to be highly active in relation to competition and consumer issues relating to digital platforms. The ACCC has conducted a number of market inquiries in relation to digital platforms and digital services businesses.
Following its 2019 Digital Platforms Inquiry, it has continued to investigate competition and consumer issues relating to digital platforms. Pursuant to the 2020-2025 Digital Platform Services Inquiry, the ACCC is publishing twice annual interim reports covering a range of topics relating to digital platforms, with interim reports covering matters including private messaging services, competition and consumer issues associated with the distribution of mobile apps to users of smartphones and other mobile devices and the provision of web browsers and general search services to Australian consumers and the effectiveness of choice screens in facilitating competition and improving consumer choice. Upcoming interim reports will cover potential competition and consumer issues in the provision of general online retail marketplaces to consumers in Australia (March 2022 interim report) and whether there is a need for regulatory reform to address the competition and consumer concerns identified in digital platform services markets to date (September 2022 interim report).
In 2021, and following recommendations from the 2019 Digital Platforms Inquiry, the Australian government passed the News Media Bargaining Code, which provides a framework regarding payment for the publication of news content on digital platforms.
The ACCC has also recently completed its Ad Tech Market Inquiry, which made a number of significant findings and recommendations relating to the supply of advertising technology services in Australia.
The ACCC has also taken specific enforcement action in relation to consumer law issues relating to digital platforms. For instance, following ACCC action, in April 2021, the Federal Court found that Google had misled consumers in relation to its communications regarding the collection and use of their data. The ACCC has also commenced proceedings in the Federal Court against Facebook for misleading consumers as to the use of their personal activity data in its Onavo app.
Apple and Google have also been under scrutiny in Taiwan, and Pakistan’s Competition Commission (CCP) has been investigating food delivery app provider Foodpanda (owned by Delivery Hero) over alleged abuse of dominance in relation to various practices including commissions, exclusivity arrangements, and rebates. The Hong Kong Competition Commission’s (HKCC) investigation into Foodpanda and rival Deliveroo for similar conduct is ongoing.
Costs of infringing competition law higher than ever
Enforcement also continues outside of digital markets. Together with the pace of enforcement across the board, fines and other penalties have continued to climb throughout the region. In many senses, the costs of infringing competition law in the Asia-Pacific region – for both companies and for individuals – have never been higher.
The record fines imposed by SAMR against Chinese tech giants have been matched by high fines from other competition authorities. Total cartel fines imposed by the KFTC in 2021 reached approx. US$864.5 million, up significantly from fines of US$147.1 million the year before. The CCI imposed a record 8.72 billion Indian rupees fine against brewers for cartel conduct, following self-reporting by Anheuser-Busch InBev in 2017. In August, the CCP imposed fines totaling 44 billion Pakistani rupees against the Pakistan Sugar Mills Association and its members over cartel and bid-rigging conduct coordination by the Association.
While fines imposed by the Malaysian Competition Commission (MyCC) in 2021 were more modest, in December 2021 the MyCC launched a major bid-rigging probe into more than 500 companies in relation to government tenders worth more than 2 billion ringgit – the largest investigation by the MyCC to date.
Fines are expected to rise elsewhere in the region. As noted above, the maximum administrative fines that can be imposed in Indonesia rose from 25 billion Indonesian rupiah to either 50 per cent of net profit or 10 per cent of turnover of the relevant company generated during the violation period. In the Philippines, the maximum possible fine that can be imposed by the Competition Commission (PCC) has been increased by 10 per cent to 110 million Philippine pesos.
Administrative fines were substantially down in Japan in the past year; however, an uptick in criminal enforcement has continued into 2021. In March, the Tokyo District Court imposed criminal fines of ¥500 million against two major construction companies for their role in fixing bids on the construction of Japan’s main magnetic levitation (mag-lev) train line, as well as imposing suspended prison sentences on two former executives. The criminal penalties followed administrative fines of ¥3.1 billion imposed by the JFTC in January.
In June 2021, the Tokyo District Court also imposed fines totaling ¥750 million and suspended prison sentences on seven executives at three major pharmaceutical distributors for fixing prices in response to tenders by the Japan Community Health Care Organization, a quasi-governmental organisation.
The JFTC’s mag-lev probe was noteworthy in that it followed a leniency application by one of the construction companies, Obayashi Corporation. Despite being first in line, Obayashi missed out on full immunity from fines because it failed to submit its full leniency application before the JFTC carried out its dawn raid against the construction companies, resulting in a fine reduction of only 30 per cent. Japan’s Anti-Monopoly Law was amended in 2019 to grant the JFTC with greater discretion to discount fines in leniency application cases, in order to encourage greater cooperation by applicants. The position taken against Obayashi suggests that the bar for full immunity in Japan going forward will be higher than before.
Criminal prosecutions in Japan were once again eclipsed by Korea, where cartelists were referred to prosecutors in the steel, railroad, chicken, shipbuilding and logistics sectors in 2021. The KFTC has also stepped up criminal enforcement in relation to obstruction of investigations. In February 2021, the KFTC referred its first-ever criminal obstruction case for prosecution in relation to steelmaker SeAH Besteel, after employees shredded documents and hid data from KFTC investigators. This was followed by a criminal referral against Apple Korea and a senior executive in March in relation to obstruction of a 2016 investigation, and a raid by prosecutors against Hyundai Heavy Industry for alleged obstruction in August.
Elsewhere in the region, Australia saw the first ever guilty plea by an individual under the criminal cartel provisions of its Competition and Consumer Act. While this was a positive development for the ACCC, the ACCC is yet to secure a guilty verdict following a jury trial – the first Australian criminal trial was held in 2021, with verdicts of not guilty. In New Zealand, amendments introducing criminal cartel sanctions under New Zealand’s competition law took effect in April. More recently, Hong Kong’s Competition Commission participated in joint raid with the Hong Kong Police that resulted in the arrests of four individuals for involvement in organised crime.
The increasing reliance on criminal prosecution powers, even among established competition authorities, suggests a growing confidence in enforcement abilities.
New directions in abuse of dominance
In last year’s chapter, we noted that an increasing confidence in enforcement abilities had also led to an increase in pursuing abuse of dominance cases. As in 2020, abuse of dominance cases in 2021 were not limited to digital platforms. Indeed, abuse of dominance cases continued to outnumber cartel cases in the Philippines. The PCC plans to issue revised guidelines on abuse of dominance charges (which has particular focus on exclusivity dealings) in the first quarter of 2022.
In 2021, SAMR expanded its focus to the pharmaceutical section leading to more abuse cases against API producers, accompanied by the issuance of new Anti-monopoly Guidelines for the Active Pharmaceutical Ingredient Field on 18 November 2021.
Another important case in China has been the Hitachi Metals case. The first instance court’s decision in this case has significantly challenged the patent system in China by introducing the concept of an essential patent (similar to essential facility), which differs from the more well-recognised concept of a standard essential patent (SEP). The current judgment has significant repercussions, as it could mean that a normal patent may also be viewed as an ‘essential’ facility, even it falls short of an SEP, and the holder of such an ‘essential’ patent may therefore be obliged to grant such patent to other undertakings. The case is now under appeal.
Japan’s JFTC broke new ground by issuing its first ever fine for exclusionary abuse of dominance in 2021, in relation to Mainami Aviation Services’ refusal to supply jet fuel to customers that purchased from a competing jet fuel supplier. Although Japan’s Anti-Monopoly Law has had a prohibition of private monopolisation (abuse of dominance) provision since 1947, the JFTC has more typically pursued abuse cases under the prohibition on ‘unfair trade practices’ (similar to the ‘unfair market practices’ power applied against Netflix in Korea). The rare abuse of dominance cases in the past have been resolved by ‘cease and desist orders’.
In February 2021, the MyCC imposed a fine of 10.3 million ringgit against Dagang Net Technologies, a provider of trade facilitation services, in one of the country’s first abuse of dominance cases. In 2022, MyEG Services’ appeal against Malaysia’s foundation abuse of dominance case, the 2016 ruling in relation to managing online-permit renewals for foreign workers, will be heard by the country’s Federal Court. The case should provide greater clarity on the rules surrounding this nascent area of enforcement in Malaysia.
A full enforcement tool-belt
2021 saw Asia-Pacific competition authorities utilising the full range of enforcement tools at their disposal.
Following a fall in leniency applications in 2020, the KFTC relied on rewards to whistleblowers to facilitate cartel detection, including payment of the highest whistleblower record ever (1.76 billion Korean won). Taiwan proposed increasing rewards under its already generous whistleblower reward scheme, doubling the maximum possible reward from TW$50 million to TW$100 million.
After relying on its new powers to resolve investigations through voluntary commitments in a third of cases concluded in 2020, the JFTC accepted commitments in some notable cases in 2021. However, the JFTC also stopped short of requiring formal commitments in two cases involving Rakuten and Apple, instead discontinuing its investigations after the companies informally promised to amend conduct that the JFTC had concerns may amount to an abuse of dominance or ‘unfair trade practice’. While the JFTC stated that not requiring formal commitments would be speedier and provide more certainty, the JFTC’s approach may also suggest a desire to limit reasoned decision-making in a difficult and developing area of law.
Entering the seventh year of full commencement of Competition Ordinance (the Ordinance) in Hong Kong, the HKCC published a policy on commitments under section 60 of the Competition Ordinance in November 2021, setting out the HKCC’s practice and procedure in respect of commitments relating to contraventions of the First Conduct Rule (prohibiting anticompetitive agreements) and the Second Conduct Rule (prohibiting abuses of market power) under the Ordinance. This new policy sits alongside the HKCC’s existing leniency regime and Cooperation and Settlement Policy for Undertakings Engaged in Cartel Conduct (Cooperation Policy), to provide detailed guidance on the range of enforcement options available to the HKCC under the Ordinance.
The latter was taken advantage of in November 2021, when the HKCC reached an settlement with three undertakings involved in an inserter cartel case under the Cooperation Policy. In particular, the Commission agreed not to pursue their current and former officers and employees and also made a recommendation to the Tribunal for reduced pecuniary penalties. This marks the first full settlement under the Cooperation Policy in Hong Kong.
 http://www.vcca.gov.vn/default.aspx?page=news&do=detail&category_id=e0904ba0-4694-4595-9f66-dc2df621842a&id=522991b7-1671-45e1-804b-98ccec418fea (Vietnamese language official release).
 https://www.kepco.co.jp/corporate/notice/notice_pdf/20210713_1.pdf (Japanese language official release); https://www.chuden.co.jp/publicity/press/1206324_3273.html (Japanese language official release); https://www.energia.co.jp/info/2021/13095.html (Japanese language official release); https://www.nikkei.com/article/DGXZQOUE0912W0Z01C21A1000000/?unlock=1 (Japanese language news report).
 https://news.sbs.co.kr/news/endPage.do?cooper=NAVER&news_id=N1006199353&plink=ORI (Korean language news report); https://www.econotimes.com/s-koreas-regulator-to-probe-unfair-biz-activity-by-online-platforms-naver-kakao-1616953.
 https://gkml.samr.gov.cn/nsjg/fldj/202107/t20210708_332422.html (Chinese language official release).
 https://gkml.samr.gov.cn/nsjg/fldj/202111/t20211118_336972.html (Chinese language official release).
 https://gkml.samr.gov.cn/nsjg/fldj/202102/t20210207_325967.html (Chinese language official release).
 http://www.gov.cn/xinwen/2021-12/29/content_5665159.htm (Chinese language official release).
 https://www.ftc.gov.tw/uploadDecision2/f4176ba4-c176-403d-9c91-2a0e0c1dad47.pdf (Chinese language official release).
 https://newsis.com/view/?id=NISX20211025_0001626293 (Korean language news report).
 https://www.jftc.go.jp/houdou/pressrelease/2021/sep/210910.html (Japanese language official release).
 For example, from contact lens makers Alcon, CooperVision and Seed: https://www.jftc.go.jp/en/pressreleases/yearly-2021/March/210326.html and BMW: https://www.jftc.go.jp/en/pressreleases/yearly-2021/March/210312.html.